This weekend Lebara — the mobile network business which has become a universally recognised brand for the world’s migrant community — is to enter the international money transfer market, potentially putting the squeeze on tech newcomers like Transferwise and Azimo. Given that migrants are the primary market for international money transfers, this could hinder the growth of startups in the space. But it may also help by switching on a new audience to other players.
Lebara Money will be leveraging its association with Lebara Mobile which was built specifically to help migrants get cheaper phone calls to back home around the globe.
As well as Transferwise, the competition for “Lebara Money” will be incumbents Western Union, MoneyGram and normal banks. Lebara Money is entering the market with a twist however, offering both competitive FX rates, but also a ‘rate lock’ feature for even small sums. Rate locks are normally offered on large international transfers and therefore tend to be the preserve of wealthier clients.
Rate locks deal with fluctuations in exchange rates, something which the UK knows all too much about right now.
The service will lock in a rate for up to 30 days for amounts as low as £100. Lebara Money is also hoping its low, upfront fee for the lock (0.5% – 1% depending on the destination) will attract a new customer base.
Here’s an example: Over the recent Brexit referendum someone planning in June to send £1,000 home to India in July could have locked in a pre-Brexit rate on June 22nd and been £147 better off when the transfer was made on July 6th.
Ratheesan Yoganathan, founder and chairman of the Lebara Group says: “Migrants have distinct financial needs that are often poorly served currently, if even recognised by the mainstream industry.”
Initially the Saturday launch will be aimed at migrants in the UK and Europe.
Azimo has raised $46.59M to date and Transferwise has raised $116.37M.
Lebara was founded by Yoganathan, Rasiah Ranjith Leon and Baskaran Kandiah in in 2001 after the founders had the idea at an airport cafe. The company’s first product was international telephone calling cards, but in 2004 it launched the first low-cost international service, selling SIM cards using mobile carrier partners.Featured Image: yurakr/Getty Images